Last month, the Federal Government made public the Productivity Commission’s (PC) final Data Availability and Use Inquiry Report (the Report). In this Report, the PC has called for the wholesale reform of Australia’s existing data frameworks, urging a rethink of the role played by consumers in the ‘data-supply chain’ and the introduction of new rules to inspire confidence and transparency in data processes. The Report also includes other far reaching recommendations in relation to the transformation, pricing and sharing of public datasets, and the creation of new government agencies to oversee data-related processes.
The Report comes in the context of a global economy being transformed by data. The proliferation of digital services and ‘intelligent’ products, and the improved capacity of businesses to collect, store and analyse data generated by those products, means that more is known about consumers than ever before. Potentially affording consumers new rights to access and use their digital data, and giving data holders permission to be pro-active in their application of that data, may be a new means of promoting competition and innovation.
The Productivity Commission has proposed an economy-wide framework for data access and use
The Report’s key recommendations are:
- That the Federal Government take steps to introduce an economy-wide “Comprehensive Right” for consumers to access and use their consumer data. This would include the right for consumers (including small and medium sized businesses as well as individuals) to access, edit and transfer their data, and to be notified when it is traded with, or disclosed to, third parties (Recommendation 5.1).
- That for the purposes of the Comprehensive Right, “consumer data” should be given a broad, outcome-based definition – that is, “data that is sufficient to enable the provision of a competing or complementary service or product for a consumer”. As a default position, businesses would be required to respond to requests from consumers by providing all digital, machine-readable information and data identifiable with the consumer, whether curated from the consumer’s digital activity or purchased by the data holder from third parties (Recommendation 5.2).
- That the exact definition of “consumer data” for any particular industry should be agreed by industry participants, which could result in a narrowing of the broad default position. Industry members would also have the opportunity to agree on the appropriate data transfer mechanisms and security protocols (the use of a particular technology would not be mandated), and the requirements necessary to authenticate a consumer request prior to any transfer of data (Recommendation 5.2).
- That the Australian Competition and Consumer Commission (ACCC) would play a central role in governance and oversight of the new framework, with assistance from other agencies. The ACCC would be responsible for approving and registering industry data-specification agreements, handling complaints and assessing the validity of charges levied by data holders against consumers (Recommendation 5.4).
Implementation of the Report’s recommendations would have substantial implications for the private sector – the flip side of new commercial opportunities would be compliance costs (particularly to facilitate the “data transfer right”) and an inevitable period of disruption. Such is the scope of the proposed reforms that the PC suggests they may offer “the capacity to underpin a new wave of competition policy, similar in its catalytic effect to the Hilmer reforms of the 1990s.” As discussed further below, one of the questions raised in this context is whether the Report’s recommendations would have a “chilling effect” on big business.
The Government’s response, so far
The Department of the Prime Minister and Cabinet has announced the establishment of a Data Availability and Use Taskforce (Taskforce) to prepare the Government’s response to the Report. The Taskforce expects to operate for 4 to 6 months to deliver a Cabinet Submission that seeks the Government’s agreement to a negotiated whole-of-government response to the Report (including Commonwealth, State and Territory governments).
Two days after the release of the Report, the Federal Government announced its support for an “open banking regime” to be implemented in 2018 following an independent review by Treasury. In his Budget Night speech, the Treasurer, Scott Morrison, said:
"The introduction of an open banking regime will give customers greater access to their own data, empowering them to seek out better and cheaper services.”
While the Government’s rationale for an open banking regime appears to align with the reform objectives stated by the PC, not much is known currently about what this separate proposed reform would entail. What is known is that limiting change to the financial services sector falls short of the PC’s call for an economy-wide transformation to address both the challenges and opportunities that exist in a data-driven world.
Treasury is due to report back around the end of 2017, which may coincide with the release of an Exposure Draft of the Taskforce’s Cabinet Submission to the Government.
We will be watching closely as further announcements are delivered, and as the results of the Taskforce and Treasury reviews are made public in the coming months.
Click here for an in-depth review of the PC’s Report and our take on the Federal Government’s recent announcements.